Can a Country Become Rich by Printing More Currency Notes?

Let’s say that a country doesn’t have enough money, to begin with—businesses are not running, unable to pay the workforce or build sanitary infrastructure to meet basic needs, or people can’t even borrow from banks due to a shortage—printing currency, in this case, can help the economy.

Printing more currency increases the production of goods, increases purchasing power, and balances the economy. During the 2008 Global financial crisis, many countries did this to get their economies moving again.

This less amount of currency will fall the prices, destroying the economy, and printing too much currency shoots the prices causing hyperinflation. Well, maybe this is why economics is often called the “dismal science”.

During the worst times of an economy, a recession, or situations like pandemics, people generally have doubts as to why can’t a country print unlimited currency, or why can’t a country print money and get rich or get out of debt.
This can help the government uplift the economy by circulating more money, paying off its loans, distributing it among its citizens, and building the infrastructure needed to come out of any crisis. Then why don’t they, what are the rules for printing currency and how does printing money affect the economy?

It’s certain that many of you have such questions making you wonder. Read on as we explain all your doubts in a detailed manner. But let’s understand the fiscal factors of the economy:

1. Inflation

The state of increase in the price of goods and services. If the economy is under inflation or prices are inflated then as a consumer, your purchasing power will be reduced since you would pay more on every purchase than before—impacting your cost of living.

2. Purchasing Power

The capacity of a consumer to purchase goods and services in any quantity. Given many lost their jobs during the pandemic, their purchasing power decreased, decreasing the demand for goods in the market

3. Law of Demand & Supply: 

Remember the days of onion prices shooting up in India? Well, those were the times of low supply and high demand, impacting the prices of onions.

4. Deficit Financing

State where government spending is more than its revenue. The spending occurs on account of either borrowing or minting more money to increase liquidity in the economy.

When any crisis tests the robustness of an economy, can a country print its own money?
The answer is yes

But it’s not entirely in the government’s hands to loosen its purse strings completely. From the Indian standpoint, there are certain regulations, repercussions, and rules for printing currency in India.